Air Transport Development: A Comparative Analysis of China and India

Abstract

China and India have attracted the attention of the world in the last two decades as powerhouses of economic growth. However, scholarly studies comparing the development of two aviation markets and the market outcomes for the two countries are lacking. This paper offers the first such comparative study, with a focus on the efficiency and productivity of airlines of the two countries. The study reviews the evolution of the air transport industry in China and India, and then assesses the efficiency performances of the state-owned and privately-owned airlines in the two markets. It is found that Indian carriers tend to be more efficient than their Chinese counterparts, and that Air India and Spring Airlines are the leaders in terms of achieving technical efficiency. The dominant status of the private airlines in the Indian market does not come by chance. The analysis shows that China’s aviation policy has long been hostile to the private carriers and various obstacles to their expansion and growth still remain. In contract, Indian private airlines, especially the low-cost carriers, have enjoyed more freedom and received support from a comprehensive air liberalization program.